Bright future predicted as value of African mega-projects soar

Investment in African mega projects surged 46% to $326bn in 2014, led by heavy investment in transport, energy and power and driven by a growing middle class on the continent, according to the third annual Deloitte African Construction Trends Report.

“The journey may not be high speed but it is unfolding at a steady pace”– Andre Pottas, Deloitte’s advisory leader for Africa

To qualify for inclusion in the report, projects must be valued at more than $50- million and had to have broken ground by at least 1 June 2014. While the number of projects that qualified for inclusion in the 2014 report fell to 257 from 322 the year before, the total value of projects under construction increased from $222.77bn in 2013.

“Africa’s rapidly growing middle class continues to drive demand for sustainable social infrastructure,” said Andre Pottas, Deloitte’s advisory leader for Africa. “Added to that, growth is being fuelled by continued investment in natural resources and agriculture. Overall, we see the opportunities surpassing the challenges facing our continent.”

Of the projects in the 2014 Deloitte African Construction Trends Report, 143 were led by the public sector; a further 88 were private sector initiatives and 26 were classified as public private partnerships (PPPs).

Energy and power accounted for 37% of the mega projects undertaken in Africa in 2014, followed by transport (34%), mining (9%), property (6%), water (5%), oil and gas (4%), mixed use facilities (2%) and health care (1%).

Praising PPPs

More than 10% of the projects included in this year’s survey were structured as PPPs, an increase from about 4% the previous year. Deloitte praised this trend, saying that private sector participation is needed, as well as government initiatives, if Africa is to close its infrastructure gap with the rest of the world.

Southern Africa led construction activity on the continent, accounting for $144.89bn in projects, or 44.5% of the total value. West Africa overtook East Africa, with the region logging $74.84bn worth of projects, or 23% of the total projects on the continent by value.

Central Africa experienced a huge surge of 117% in the value of construction projects, which reached $33.21bn, while North Africa saw the value of construction projects rise 36% to $9.12bn. East Africa experienced a moderate 10% decline in the value of projects, which nevertheless totalled a respectable $60.67bn in 2014.

Deloitte said that rapid urbanisation and rising domestic demand has ushered in an unprecedented wave of foreign direct investment in the continent's biggest and most dynamic economies.

The report concludes that Africa is en route to a brighter future: “The journey may not be high speed but it is unfolding at a steady pace,” said Pottas.

Photograph: Under construction here is the $380m state-of-the-art deepwater container port in Lomé, capital of Togo, an example of Africa’s booming infrastructure market. When complete, it will be one of the biggest container ports in Africa. Courtesy of project managers Hill International.